The Panama Canal

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Building on the success of the construction of the Suez Canal, Ferdinand de Lesseps, more than seventy years old, was persuaded to repeat the operation in the isthmus of Panama - then Colombian territory - without listening to the warnings of the engineers who highlight the technical difficulties.

Financially, Ferdinand de Lesseps resumed the methods that had succeeded so well in Suez twenty years earlier: the creation of a company ("Compagnie Universelle du Canal Interocéanique de Panama"), the issue of shares, the placement of bonds.

The Compagnie Universelle du Canal Interocéanique de Panama was formed on October 20, 1880, with a share capital of 1 billion 335 million francs. Banks, led by Crédit Lyonnais, for comfortable commissions, stuff their customers with paper. But Panama is the barrel of the Danaides ...

Action de 500F 
de la Compagnie Universelle du Canal Interocéanique de Panama (1880)

To support successive programs (seven series from 1882 to 1888), they have to work on public opinion. The company buys journalists, but also parliamentarians: 104 shall we say! Reckless or naive, they accept checks. In return, the Chambers end up authorizing the company to issue batch loans. But it is already too late.


Obligation Nouvelle de 500F 5%
de la Cie Universelle du Canal Interocéanique de Panama (1883)

In 1889, it was a debacle. The company is put into liquidation. 800,000 "small carriers" are ruined; they brought a billion and a half francs of the time (equivalent to thirty today). Given the scale of the smoldering scandal, the Loubet government began by trying to stifle it. Pain lost, the affair broke out in broad daylight in 1892 and transferred to the political field. Parliamentarians and compromised ministers are pilloried.

A commission of inquiry is appointed. One of the most compromised financiers, Reinach, dies conveniently. His accomplice, Cornelius Herz , friend of the Minister of Finance Rouvier, fled abroad. The ministry only has to resign. We find the stubs of the checks and the names of their beneficiaries, including those of the ministers Rouvier, Baïhaut, Charles Floquet , who of course claim to have used the money to finance their electoral campaign.

Obligation Nouvelle de la Cie Universelle du Canal Interocéanique de Panama (1886)

The commission of inquiry made its report only in 1897. The justice rendered its verdict in 1893. But time had already done its work of appeasement. Almost all the accused were acquitted, with the exception of Baïhaut (who had confessed!), Ferdinand de Lesseps, his son, and Gustave Eiffel , sentenced respectively to five and two years in prison , judgment which was quashed and not returned.

Lesseps died in 1894 without knowing the trial. Again the small savers are written off. But the foundations of the Republic are shaken. The Panama Affair, with its hints of anti-parliamentary and anti-Semitism, will fuel the Dreyfus Affair which begins, precisely, in 1894.

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